International Conference on Technology and Business Management March 28-30, 2011
India’s Demographic Dividend - Issues and Challenges
Arun IngleP B Suryawanshi
firstname.lastname@example.org email@example.com Pad. Dr. Vitthalrao Vikhe Patil Foundation’s Institute of Business Management and Rural Development, Ahmednagar
India is transforming demographically, in which the population of a nation slows down and life expectancyincreases, participation of women in labor force and rate of saving increases. India has its own issues likeilliteracy, income disparity, gap between haves and have-nots; etc. This study explores demographic dividend incase of India by studying issues and challenges, the policies to be implemented and lessons to be learned fromcountries like Japan, Ireland and Thailand. By 2025, India will have over 65% population under working class.This is a unique window of opportunity for deploying resources.This study explores the benefits to be realized and the policies to be implemented; now India is well poised forbecoming a super economic power. As all developed nations will have older population by 2026, as theirpopulation is aging. It means if India can take the advantage of this situation, by proper deployment of resources, by converting the human potential in to engine of economic growth. This period of demographicdividend is an opportunity for overall growth; it’s not the guarantee for improving the standard of living. Thiswindow of opportunity demands from youth, the right skills and aptitude for employability.Developing nations like India goes through a transition phase, in which the economy shifts from agrarian toindustrial production and growth of services sector. Industrial countries have largely completed what is calledthe "demographic transition"—the transition from a largely rural agrarian society with high fertility andmortality rates to a predominantly urban industrial society with low fertility and mortality rates. At an earlystage of this transition, fertility rates fall, leading to fewer young mouths to feed. During this period, the laborforce temporarily grows more rapidly than the population dependent on it, freeing up resources for investment ineconomic development and family welfare. Other things being equal, per capita income grows more rapidly thisis the first dividend followed by second dividend which is asset accumulation.Demographic transition is the window of opportunity for implementation of development oriented Govt.policies. This one-time gift of the demographic transition is expected to provide lots of opportunities fordevelopment and economic gains.
During the transition population growth and changes in the age structure of the population are inevitable, if appropriate policies pursued.
The debate over relationship between population growth and economic development is there since the muchcriticized theory of Malthus in 18
century. Economist focused on the size of population and the growth of nation, but the composition of population age structure was not considered until the study of Coale and Hoover(1958), but in recent years, demographers Bloom et al have studied the type of composition of
of population and its effect on economic growth and the concept of “demographic dividend” emerged.Demographic dividend
is defined as a rise in the rate of economic growth due to a rising share of working agepeople in a population. This phenomenon occurs with a falling birth rate and the consequent shift in the agestructure of the population towards the adult working ages. It is also commonly known as the demographic giftor bonus or demographic window. With many developing countries particularly in the Asian continentexperiencing a rapid decline in fertility, there has been overwhelming optimism that the demographic bonus willtake these countries to greater economic heights [Bloom and Williamson 1998; Cyrus Chu and Lee 2000;Mason 1988].As generally defined, demographic dividend occurs when a falling birth rate changes the age distribution, sothat fewer investments are needed to meet the needs of the youngest age groups and resources are released forinvestments in economic development and family welfare (John Ross, 2004).India is going through this transition phase, now a view has gained ground that what matters is not the size of the population, but its age structure. However large the total population, is seen as an inevitable advantagecharacterized as a “demographic dividend”. For India the size of working age population (age15 -60 yrs) will be63.33 % in 2016 and population having age below 15 years will be 27.73% (National population policyprediction). Given the availability of work and the resulting increased employment opportunities, the scenario